There is no 'Fundamental value'. The price is only determined by supply and demand.
Companies are traded with wildly different valuation to profit ratios,
perception of stability, speculation of future profit, and even ethics.
For example look at TSLA valuation compared to revenue, and compare it to any other car company.
Stock prices also go up after governments print money, because banks have spare cash to invest but the economics of an individual company have not changed.
At the end of the day an investor can't calculate fundamental value, there is no agreed formula for it.
>There is no 'Fundamental value'. The price is only determined by supply and demand.
That's a "first order" thinking.
The parent posits that there are forces working (eg. use value or prestige value or fad value) before and beyond "demand" (which is obvious - else what drives demand itself? It's not some magic entity that emerges out of nowhere).
And hence, demand could be driven up beyond a sustainable level (e.g. in the case of the "gold rush", or the "tulip bubble" -accurate or not-), and be corrected when that reaches its breaking point. Or a state or business could also drive up demand artificially in some cases (e.g. buying its own stock covertly).
>At the end of the day an investor can't calculate fundamental value, there is no agreed formula for it.
No, but if they're good, they can and should approximately calculate how different this "fundamental value" is from the traded value, and how sustained is the demand, to calculate the trajectory of a stock, and its rick...
Companies are traded with wildly different valuation to profit ratios, perception of stability, speculation of future profit, and even ethics. For example look at TSLA valuation compared to revenue, and compare it to any other car company. Stock prices also go up after governments print money, because banks have spare cash to invest but the economics of an individual company have not changed.
At the end of the day an investor can't calculate fundamental value, there is no agreed formula for it.